Prepping for Surgery

Recently, Mayor Jim West announced that the city of Spokane is facing a 2004 budget shortfall of about $6 million. Instead of dipping into the city's already dismal reserve funds, or asking the citizens to fork over more in taxes, he decided to try something different. West wrote a $150,000 check to hire a consultant from the Public Strategies Group (PSG), a St. Paul, Minneapolis-based company that helps public entities revolutionize their services.

Specifically, PSG employs the authors of The Price of Government, a widely acclaimed book that introduces a budgeting process called Priorities of Government (POG), in which a government "buys" services from its departments, as though on a shopping trip. The shopping list is prioritized so that the most important services are picked up and put into the cart first. When the money is spent, whatever's left on the list gets tossed.

"[With a budget shortfall], normally the mayor would issue a decree saying he had to cut a certain percentage from the rest of the year's budget. It's a messy way of doing things, and it doesn't take into account what citizens see as a priority," says Steve Struthers, the lead PSG consultant for Spokane's POG process.

Public input is one of the main focal points for the POG budget process, and as it turns out, one of the points of contention among critics. For two weeks in late June and early July, the city held a public comment period, asking Spokane residents to help prioritize city services.

"What the mayor and his cabinet did, with consultation from the city council, is list eight priorities," explains Struthers. "They asked via their Web site, put out flyers and put an ad in the daily paper saying, 'Here are these eight priorities. If you had $100, how would you allocate the money to each of them?'"

The eight priorities were categories based on the intended results of a city's services: growth and learning, healthy citizens, healthy environment, leadership, mobility, reduced vulnerability for at-risk citizens, safety for the general public and a strong economy.

The city held two public meetings and received about 1,300 responses; many came from city employees. Based on the surveys, safety and mobility ranked as the top priorities.

"There was a lot of consistency," says Struthers, regarding what types of services citizens valued. "People basically spent 20 percent on public safety, 20 on mobility and everything else got five or 10 [percent]."

In the meantime, each city department and the agencies or programs in those departments have put their services up "for sale," with price tags and an "ingredients list," listing how the service creates results that qualify for one of the eight city priorities. More than 400 bids came in.

Armed with public input and the department bids, West and his cabinet, along with representatives from the four largest employee unions, closed the doors and sat down to rank departments and programs.

One city employee, wishing to remain anonymous, says that asking each department to justify its services has created an environment of anxiety and agitation among departments. But Struthers says the competition over the remaining budget will lead to better services at a better price. "There were no restrictions on who could bid for what," he explains.

On Monday, Mayor West stood before the city council and revealed how each city service ranked under the eight priorities. Under the category of Growth and Learning, for example, Neighborhood Library Services were given top priority while the Joe Albi Stadium ranked least important. Under the category of Strong Economy, the Four Champion Municipal Golf Courses were a high priority, while the Neighborhood Resource Officer Training Program was way down the list. But West explained that just because a service ranked low on one priority list doesn't necessarily mean it won't be funded. Some of the city's services entered duplicate bids under several of the eight categories; if a program ranked low under Growth and Learning, for instance, it might rank higher under Strong Economy.

"More work needs to be done," West told the council. "We're not through with the process."

When the city actually gets down to cutting services, the lists will look different.

"We're looking at things that everyone likes, everyone wants to do, that aren't going to get funded," West said. "As we go through this process, we're learning an awful lot. More people know about the budget than they've ever known before. That is a very healthy process."

Healthier = Wealthier? -- The simplicity of bringing budgets back into balance appeals to more than just Mayor West. In fact, West is familiar with the POG budgeting process because he's been a part of it on the state level. When Washington was faced with a $2.7 billion deficit, Gov. Gary Locke hired the Public Strategies Group to come in with the POG process. For the past two years, the state has used this system.

"This is a way to prioritize what you do," says Candace Espeseth, assistant director for the state's financial management office. "The deficit doesn't go away, but it's a way of choosing how you're going to spend your money."

The simplicity of POG, says Public Strategies' Struthers, is its genius.

"In government, the way we traditionally get citizen input is we hold a public meeting on a narrow topic," explains Struthers. "What this [process] is asking is a very different question -- it's the entire thing of what city government could do. Citizens rarely get asked that.

"Citizens don't care about what department does what, what fund it comes out of," Struthers continues. "They care whether there's good financial stewardship; they don't care if it's the city, the county, the parks -- it's all government."

Still, not everyone is sold on POG.

"I think the concept itself [is] certainly worthwhile to explore, but on the other hand, it could well be another one of these latest, greatest ideas that we don't know how it will shake out in the long run," says Jay Cousins, a neighborhood activist for the Emerson-Garfield neighborhood. "I'm just concerned that some worthwhile services and projects might get [shorted], and it will be hard to get them back."

"There will be real cuts to real programs, and people will experience it," Struthers agrees. "No one ever believes there's a real deficit, but this is a big number. Governments all across the country are facing this. Fiscal crisis in government is not going to go away."

Cousins thinks that the public participation part of this budgeting process was more for show than to get real citizen feedback. Both Struthers and Mayor West acknowledge that the public input was not a valid representation of what citizens in Spokane really think about the budget.

"No one is claiming that the responses represent the collective notions of Spokane, but it is what it is," Struthers says. "It's a very, very quick process."

"It's not scientific, but to get a general idea," West explained to the council. "We know there was duplication [of survey entries]. We know there was ballot-stuffing -- it's just inevitable when you have Internet ballots."

Though the mayor has been lauded for opening the budget process up to the public, some people aren't convinced it's genuine.

"All I know is they took somewhat simplistic and simple-minded surveys and went behind closed doors to discuss it, which I object to mightily," Cousins says. "Frankly, the larger concern is that the public is invited into this rather simplistic participation piece -- and then, when it comes to the real discussion, the public is completely excluded."

The public is welcome to view how each city service was ranked under the eight main categories by visiting www.spokanecity.org, then following the links to the POG voting results. More budget decisions will be made public at the Sept. 9 Spokane City Council meeting.

"Credit agencies expect cities to have reserves," Struthers adds. "So they have to do things to address the revenue shortfall and for reserves."

West told the council that the average reserve percentage for a positive bond rating is somewhere between eight and 10 percent of the city's general fund. That means one-time money-saving maneuvers aren't going to work. It's likely that positions will be permanently cut and some services may be completely abandoned.